Hulu Spending Money to Make Money in 2012
Hulu, a streaming video company that provides access to network television content, reported 2011 revenues of $420 million, according to a recent corporate blog post. This is up 60 percent from 2010, but lower than September’s $500 million estimate. Other 2011 positive news included the growth of Hulu Plus, an $8 per month unlimited option, to its 1.5 million paying customers.
CEO Jason Kilar said of the number, “Hulu Plus has reached 1.5 million paid subscribers faster than any video subscription service launch (online or offline) in U.S. history. We expect our subscription services to account for more than half of Hulu’s overall business later this year.”
From Kilar’s confidence in Hulu and its profitable dual ad-subscription revenue stream …
he announced the company’s plans to spend approximately $500 million to acquire new content this year. This figure is $80 million more than it made in 2011.
How can Hulu spend $500 million? In the digital content world, it won’t buy much. The company’s competitor Netflix (NASDAQ:NFLX) supposedly pays $20 million for each DreamWorks (NASDAQ:DWA) picture. This probably comes in higher than what Hulu pays for TV show rights on Community or CW content.
Is this number too high for Hulu to spend? It’s hard to tell unless you review Hulu’s books. Business and subscribers are growing and its content library is also increasing: in 2011, it grew by 40 percent as compared to 2010.
At least Kilar seems to know one thing. He said,”Hulu is in a risky business.”
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